EUR/USD Dismisses Weak Industrial Production

Industrial production in the Euro-zone grew in February by only 0.4%. The consensus of economists stood on a rise of 0.8%. This weighs on the efforts of EUR/USD to move higher towards the important resistance line, but doesn’t weaken it significantly.

Last month, industrial output rose by only 0.2% (revised downwards from 0.3%). So, this is slightly better than last month, but still significantly lower.

EUR/USD now loses the 1.45 line that it crossed earlier in the day. The move is currently limited, especially as the US dollar is currently making gains against other currencies.

The expectations for the outcome of this indicator are based on the figures already released by some individual countries in the Euro-zone, such as Germany and France, which are the largest economies. Nevertheless, the outcome still tends to surprise economists and to shake the Euro.

Earlier today, France has shown that inflation is on the rise. The Euro-zone’s second largest economy printed a rise of 0.8% in consumer prices (CPI), higher than 0.6% that was expected and higher than last month’s 0.5%. Europe’s largest economy, Germany, also showed that prices are on the rise, with the WPI (Wholesale Price Index) rising at a pace of 1.3%, as expected.

The rise of the Euro in recent months was based on expectations for a rate hike, that eventually happened. Weaker  production reduces the chances of another rate hike in the near future, as growth is endangered more than beforehand. For Europe’s peripheral countries, a higher interest rate poses a big risk to growth – these economies in Portugal, Spain, Greece and Ireland have hardly recovered from the financial crisis.

EUR/USD traded before the release around 1.45, after marking a narrow range of 1.4480 to 1.4520. On the upside, the important level to watch is 1.4580 – the highest level in 15 months. On the downside, stronger support is found at 1.4450.

For more technical analysis and an outlook of events that will rock the Euro, see the EUR USD Forecast.